November 23rd marked an historic day for the affordable housing community in San Francisco as 15 public housing sites were turned over to private developer teams to begin work on a monumental rehabilitation project. After many years of insufficient funding for repairs, much of the public housing units of the Housing Authority of the City and County of San Francisco (“Housing Authority”) are now set to be completely rehabilitated through the United States Department of Housing and Urban Development Rental Assistance Demonstration (“RAD”) Program, which was unveiled nationwide in 2012. The RAD Program permits the developer teams to leverage public and private debt and equity in order to reinvest in the public housing stock. Under the RAD Program, all of the public housing units become permanently affordable units under the Section 8 platform with a long-term contract that must be renewed by law. The conversion to the RAD Program will provide the $220 million in long-deferred property repairs needed to renovate a substantial number of the public housing units in San Francisco. All of the units in the Housing Authority portfolio in the RAD Program will remain permanently affordable under both the requirements of the RAD Program and pursuant to the terms of a ground lease with the Housing Authority. Current residents will not be displaced from their units, except for temporary relocation during construction.
Financing for the massive undertaking was provided by Bank of America as the construction lender and equity investor for all of the projects, in partnership with Freddie Mac as the permanent lender, as well as significant financing from the San Francisco Mayor’s Office of Housing and Community Development (“MOHCD”) and the Housing Authority. Phase I of the RAD conversion includes the rehabilitation of more than 1,400 units at a cost of $692 million. By the completion of Phase II, $1.69 billion will be injected into the projects to permanently transform San Francisco’s public housing portfolio through the rehabilitation of over 3,500 public housing units for 8,000 low-income San Franciscans. Phase I of the RAD Program transformation is now underway and Phase II will follow in 2016 to begin rehabilitation of an additional 14 public housing sites.
Goldfarb & Lipman LLP represented the Housing Authority on all 15 RAD transactions, and will represent the Housing Authority on Phase II next year. Goldfarb & Lipman LLP is proud to be involved with this historic revitalization of affordable housing in San Francisco.